Deal For Ovaltine Site Dropped

Buyer Gets Cold Feet In `Precarious` Tax Climate

September 18, 1985|By Neil Mehler.

Amli Realty Co. has pulled out of a deal to buy the property occupied by the historic Ovaltine Products Inc. plant in Villa Park, Village President Douglas Brandow told the village board meeting Monday night.

Amli has been concerned about federal tax reform proposals, Brandow said, and ``didn`t think it could put together a financial package by the end of the year.`` The tax situation is ``pretty precarious`` because of debate in Washington over tax reform, he said.

President Reagan has proposed ending tax credits for the preservation and rehabilitation of historic buildings and areas, which Amli had been counting on to make economically feasible the conversion of the 68-year-old Ovaltine facility into 320 apartment units.

The Amli proposal has been the only active plan for the property, which officials of Ovaltine`s parent company, Sandoz Nutrition Corp., have said will be vacated late this year or early in 1986. It no longer is profitable to produce Ovaltine in the aged Villa Park plant, said officials, who plan to move most of the operation to Minneapolis.

The Amli deal ``got hung up in the tax environment,`` Richard Burt, corporate secretary for Ovaltine in New York, said Tuesday. ``We`re going to sell the property,`` he said, adding that ``a number of parties are interested in the building but not to the point of sitting down on a contract.``

Taxes on the 15-acre site and plant are about $56,000 a year, of which Villa Park has received about $12,000, according to Village Manager Kevin O`Donnell. Overall taxes on a vacant plant would be about $16,000, according to Lester Swailes, York Township assessor. Swailes said that if the buildings were vacant, ``their value would be just about zero`` and the assessed valuation of the whole property would be cut almost in half.

In an appraisal of the Reagan tax reform proposal published by the National League of Cities, John E. Petersen, a co-editor of the study, wrote: ``Investment tax credit for rehabilitation and historic preservation will be eliminated, which will affect investment in older, more urban areas in particular. Projects will tend to be smaller, with higher rents, and will be located in lower-cost areas. Tax-motivated projects will give way to those with proven economics of revenue-generating capability.``

Peterson wrote that local governments will be forced ``to place greater reliance on local resources.``

Amli`s plan had at least two potential benefits. It would fill vacant facilities, thus keeping them on the tax rolls, and it would attract more people and the retail outlets to serve them. The proposal was seen as a shot in the arm for the area around the Ovaltine plant, in east-central Villa Park off of Villa Avenue.